FAQ on Hedge Funds
Updated on Tuesday 21st August 2018
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What is a hedge fund?
A hedge fund startup represents a type of vehicle which is registered for the purpose of obtaining returns on its underlying investments. As a general rule, a hedge fund startup can be incorporated as a limited partnership, formed by a manager who acts as a general partner and several investors who act as limited partners.
What is the allocated time for opening a hedge fund?
The period of time allocated for the registration of a hedge fund depends on the jurisdiction in which the fund is set up, but, as a general rule, it can vary between 6 to 8 weeks. This may vary depending on how fast the investors can provide specific documents, as well as on the licenses that can be required for the fund’s manager.
What are the main fees associated with a hedge fund?
Investors who are interested in how to start a fund registered as a hedge fund should know the vehicle’s manager will charge specific fees, imposed on the fund’s net assets. At the same time, the fund manager is entitled to request a performance based fee. As a general rule, the asset management fee ranges between 1 – 2% of the fund’s net assets and it is typically imposed on a quarterly basis.
The following video offers a short presentation on the registration of a hedge fund:
Who can become a hedge fund investor?
A hedge fund startup is opened to a wide category of investors, but, in practice, most of the hedge funds are set up by investors who have in-depth knowledge of the financial markets and who can afford to perform investments with a high value. In most of the cases, a hedge fund will require an accredited investor.
Are hedge funds risky financial instruments?
In most of the cases, hedge funds are considered vehicles addressed for conservative investments. More importantly, they are designed to reduce the risks associated with investments and, thus, they are not seen as risky financial instruments.
Investors who are interested in how to start an investment fund in one of the top investment destinations are invited to address to our team of affiliates, who can advise on the main advantages provided by a hedge fund.